The ACIT,Mehsana Circle, Ahmedabad V. Manek Chemicals Pvt.Ltd., Mehsana

ITA 2365/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89449 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M J PATEL
• Assessee Lawyers: MUKESH M PATEL
• Section: 143(3); 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NOS. 2364 & 2365/AHD/2011 (ASSESSMENT YEAR: 200 3-04 & 2004-05) ACIT, MEHSANA CIRCLE, MEHSANA V/S MANEK CHEMICALS P. LTD., OPP. ONGC COLONY, PALAVASNA, MEHSANA-384003 (APPELLANT) (RESPONDENT) PAN: AABCM2883K APPELLANT BY : SHRI M.J. PATEL, SR. D.R. RESPONDENT BY : SHRI MUKESH.M.PATEL, A.R. ( )/ ORDER DATE OF HEARING : 05-05-2015 DATE OF PRONOUNCEMENT : 15 -05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 2 APPEALS FILED BY THE REVENUE ARE AGAINST TH E ORDER OF CIT(A), GANDHINAGAR, AHMEDABAD DATED 30.06.2011 FOR A.YS. 2 003-04 & 2004-05. 2. AT THE OUTSET, BEFORE US, BOTH THE PARTIES SUBMITTE D THAT THOUGH THE APPEAL OF THE ASSESSEE RELATES TO 2 DIFFERENT ASSESSMENT YEAR S BUT THE FACTS AND CIRCUMSTANCES OF BOTH THE CASES ARE SIMILAR EXCEPT FOR THE ASSESSMENT YEARS AND AMOUNTS AND THE SUBMISSIONS ARE ALSO COMMON FOR BOTH THE APPEALS AND THEREFORE BOTH THE APPEALS CAN BE HEARD TOGETHER. W E THEREFORE PROCEED TO ITA NOS. 236 4 & 2365/AHD/2011 . A.YS. 2003- 04 & 2004-05 2 DISPOSE OF BOTH THE APPEALS TOGETHER FOR THE SAKE O F CONVENIENCE AND THUS PROCEED WITH THE FACTS IN A.Y. 2003-04. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF MANUFACTURING OF BLEACH. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2003-04 ON 28.11.2003 DECLARING TOTAL INCOME AT RS. 50,70,230/ - WHEREIN IT CLAIMED DEDUCTION OF RS. 22,87,322/- U/S. 80IB OF THE ACT. INITIALLY THE ASSESSMENT WAS FRAMED U/S. 143(3) ON 31.03.2006 AND THE TOTAL INCOME WAS DETERMINED AT RS. 55,89,688/-. SUBSEQUENTLY NOTICE WAS ISSUED U/S. 148 ON 29.03.2010 FOR THE REASON THAT A.O NOTICED THAT IN THE AUDIT R EPORT IN FORM 10CCB, THE COMMENCEMENT OF BUSINESS WAS STATED TO BE 10.01.199 6. A.O NOTED THAT AS PER SECTION 80IB(3)(I) THE UNDERTAKING SHOULD COMME NCE THE PRODUCTION ON OR BEFORE 31.03.1995 SO AS TO BE ELIGIBLE FOR DEDUC TION U/S. 80IB. A.O WAS THEREFORE OF THE VIEW THAT SINCE AS PER THE AUDIT R EPORT, ASSESSEE HAD STARTED COMMERCIAL PRODUCTION ON 10.01.1996 WHICH WAS AFTER THE CUT OFF DATE OF 31.03.1995, ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB AND THE A.O THEREFORE WANTED TO WITHDRAW THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND AFTER REJECTING THE CONTENTIONS OF ASSESSEE, THE ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 VIDE ORDER DATED 24.12.2010 AND THE TOTAL INCOME WA S DETERMINED AT RS. 74,16,884/- BY WITHDRAWING THE CLAIM OF DEDUCTION U /S. 80IB. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFO RE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIDE OR DER DATED 03.06.2011 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEL ETED THE ADDITION MADE BY A.O, BY HOLDING AS UNDER:- ITA NOS. 236 4 & 2365/AHD/2011 . A.YS. 2003- 04 & 2004-05 3 5.2 HAVING GONE THROUGH THE ASSESSMENT ORDERS, WRIT TEN SUBMISSIONS AND FACTS OF THE CASE, THE DISPUTE ON MERITS IS ON THE ACTUAL DATE O F COMMENCEMENT OF PRODUCTION. THE AO HAS RELIED ON THE DATE OF COMMENCEMENT OF PRODUCTIO N AS MENTIONED IN COLUMN NO. 8 OF THE AUDIT REPORT IN FORM 10CCB FILED BY THE ASSESSE E IS 10/01/1996. THE APPELLANT BEFORE THE AO AND IN THE PRESENT PROCEEDINGS HAS CLAIMED T HAT THE DATE MENTIONED IN THE AUDIT REPORT IN FORM 10CCB, WAS A MISTAKE ON THE PART OF THE NEW AUDITOR. THE APPELLANT HAS SUBMITTED THAT THE PRODUCTION HAD IN FACT COMMENCED DURING THE FY 1994-95 (I.E., BEFORE 31ST MARCH, 1995) AND RELIED ON EVIDENCES INCLUDING THE ANNUAL REPORT, SALES BILLS, PAYMENT OF SALES TAX ETC. A CERTIFICATE FROM THE SA ME AUDITOR, CERTIFYING THAT THE CORRECT DATE OF COMMENCEMENT OF PRODUCTION WAS 15/6/1994 AN D CLAIMING THAT IT WAS THEIR MISTAKE IN ERRONEOUSLY MENTIONING THE DATE OF PRODU CTION AS 10/01/1996 WAS ALSO FILED. HOWEVER, THE AO HAS RELIED ON THE DATE OF COMMENCEM ENT OF PRODUCTION AS MENTIONED IN THE AUDIT REPORT IN FORM 10CCB, I.E. 10/01/1996, NO T ACCEPTING THIS CONTRARY ASSERTION OF THE ASSESSEE AND EVIDENCES SUBMITTED BY IT AND WENT ON TO HOLD THAT IN ORDER TO GET THE CLAIM IF IT IS NOT AN SMALL SCALE INDUSTRIAL UNDERT AKING (WHICH IT IS NOT BECAUSE IN ASSESSEE'S CASE THE VALUE OF P&M IS RS.1.60 CRORE) THEN AS PER CONDITIONS APPLICABLE U/S. 80IB(3)(I) THE PLANT SHOULD HAVE BEGAN TO MANUFACTU RE OR PRODUCE OR TO OPERATE SUCH PLANT BEFORE 31 ST DAY OF MARCH, 1995. IN THESE CIRCUMSTANCES, THE CA SE WAS REOPENED AND THE CLAIM OF DEDUCTION U/S. S. 80IB WAS DISALLOWED. NOW, EVEN IN CASE THE ACTUAL DATE OF COMMENCEMENT OF PRODUCTION IS 10/1/1996 AS CONTENDE D AND HELD BY THE AO, THEN IN THAT CASE, IT WOULD BE A CASE OF FULL AND TRUE DISC LOSURE ON THE PART OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT THIS DATE HAS BEEN NOTICE D BY THE AO FROM COLUMN NO. 8 OF THE AUDIT REPORT IN FORM 10CCB FILED BY THE ASSESSE E WITH THE INCOME-TAX RETURN ITSELF. THE ORIGINAL ASSESSMENTS FOR BOTH THE ASSESSMENT YE ARS WERE COMPLETED U/S. 143 (3) AND THE REOPENING IN BOTH CASES IS BEYOND 4 YEARS. THER EFORE, THE FIRST PROVISO TO SEC, 147 IS APPLICABLE TO BOTH THE ASSESSMENT YEARS. AS THE REA SON FOR REOPENING AND EVEN FINAL DECISION AGAINST THE ASSESSEE IS THE DATE MENTIONED IN THE AUDIT REPORT FILED, WITH THE RETURN ONLY, HOW CAN IT BE A CASE OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY AIL MATERIAL FACTS, THE REOPENING IS HELD INVALID IN THESE CIRCUMSTANCE S WHERE FAILURE ON THE PART OF ASSESSEE IS NOT EVEN INDICAT ED. THIS UNAMBIGUOUS POSITION OF LAW ITA NOS. 236 4 & 2365/AHD/2011 . A.YS. 2003- 04 & 2004-05 4 AS STATED IN THE STATUTE HAS ALSO BEEN DECIDED BY H ON'BLE SUPREME COURT AND JURISDICTIONAL HIGH COURT IN THE FOLLOWING CASES: (I) CITV/S.FORAMER FRANCE 264 ITR 566(SC) (II) CALCUTTA DISCOUNT CO LTD V/S. ITO 41 ITR 191 ( SC) (III) MEGHDOOT LAMINART PVT LTD V/S. DCIT 238 ITR 9 18 (GUJ) (IV) GUJARAT CARBON & INDUSTRIAL LTD 307 ITR 271 (G UJ) AS THE REOPENING AND; THEREFORE SUBSEQUENT ASSESSME NT HAS BEEN HELD INVALID, FOR BOTH THE ASSESSMENT YEARS, THE GROUND ON MERITS BECOMES ACADEMIC AND DOES NOT REQUIRE SEPARATE ADJUDICATION. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS;- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN TRE ATING THE ASSESSMENT AS INVALID U/S. 147 OF THE I.T. ACT WITHOUT CONSIDERING THE CORRECT POSITION OF LAW IN SUB-CLAUSE (III) OF CLAUSE (C) OF EXPLANATION 2 OF SECTION 147 WHERE EXCESSIVE RELIEF UNDER I.T. ACT 1961 DEEMED TO BE A CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) A ND SUBMITTED THAT THE DATE OF PRODUCTION MENTIONED IN FORM 10CCB AS 10.01 .1996 WAS A MISTAKE ON THE PART OF THE AUDITOR WHEREAS IN FACT THE ASSE SSEE HAD STARTED THE COMMENCEMENT OF PRODUCTION ON 15.06.1994 AND IN SUP PORT OF WHICH ASSESSEE HAD FURNISHED VARIOUS OTHER SUPPORTING EVI DENCES. HE FURTHER SUBMITTED THAT ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB HAS BEEN ALLOWED IN SCRUTINY ASSESSMENTS IN A.Y. 2002-03 TO 2005-06. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF DEDUCTION U/S. 80IB WAS MAIN LY DENIED BY THE A.O FOR ITA NOS. 236 4 & 2365/AHD/2011 . A.YS. 2003- 04 & 2004-05 5 THE REASON THAT AUDITOR IN THE AUDIT REPORT HAD STA TED THE DATE COMMENCEMENT OF PRODUCTION AS 10.01.1996 WHICH WAS AFTER THE CUT OFF DATE OF 31.03.1995 AS PRESCRIBED UNDER THE RELEVANT PROVISION OF THE A CT. THE SUBMISSION OF THE ASSESSEE THAT THE THE DATE OF COMMENCEMENT OF PRODU CTION AS 10.01.1996 AS STATED BY THE AUDITOR WAS A MISTAKE ON THE PART OF THE AUDITOR WAS NOT ACCEPTED BY THE A.O. WE FIND THAT BEFORE LD. CIT(A) ASSESSEE HAD PLACED OTHER EVIDENCES LIKE THE DIRECTOR REPORT, SALES INV OICES, CHALLANS FOR PAYMENT OF SALES TAX ETC TO PROVE THAT ASSESSEE HAD INDEED STARTED PRODUCTION BEFORE THE CUT OFF DATE OF 31.03.1995. T HERE IS NO CATEGORICAL FINDING OF LD. CIT(A) THAT THE AFORESAID EVIDENCES FURNISHED BY THE ASSESSEE ARE NOT CORRECT. BEFORE US, REVENUE HAS ALSO NOT PL ACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT ASSESSEE HAD NOT STARTED COMMERCIAL PRODUCTION BEFORE THE CUT OFF DATE OF 31.03.1995 PRESCRIBED U/ S. 80IB. WE FURTHER FIND THAT LD. CIT(A) HAS HELD THE REOPENING TO BE INVALI D BECAUSE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) AND THE REOPEN ING WAS BEYOND A PERIOD OF 4 YEARS AND IT WAS NOT A CASE OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. WE FUR THER FIND THAT LD. CIT(A) WHILE HOLDING THE REOPENING TO BE INVALID HAD RELIE D ON CERTAIN DECISIONS OF HONBLE APEX COURT AND HONBLE GUJARAT HIGH COURT. BEFORE US, REVENUE HAS NOT BROUGHT ANY CONTRARY BINDING DECISIONS IN I TS SUPPORT NOR COULD CONTROVERT THE FINDINGS OF LD. CIT(A). IN VIEW OF T HESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AN D THUS THE GROUNDS OF REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ITA NOS. 236 4 & 2365/AHD/2011 . A.YS. 2003- 04 & 2004-05 6 NOW WE TAKE UP ITA NO. 2365/AHD/2011 FOR A.Y. 2004- 05. 9. IN THE PRESENT CASES, SINCE BOTH THE PARTIES HAVE A DMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO THAT IN A.Y. 2003-04, WE THEREFORE FOR THE REASONS STATED HEREINABOVE WHILE DECIDING T HE APPEAL FOR A.Y. 2003- 04 IN ITA NO. 2364/AHD/2011 (SUPRA) AND FOR SIMILAR REASONS DISMISS THE GROUNDS OF REVENUE IN THE PRESENT APPEAL. 10. THUS THE APPEAL OF REVENUE IS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 15 - 05 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD